Daiso to open new stores in Singapore amid ‘stable future’; wants products to be ‘not just something cheap’

PRICE CHANGE NOT AN EASY DECISION

Daiso, a budget retailer known for its S$2 items, announced in April that it would be rolling out a new 15-tier pricing system due to rising raw material and logistics costs.

Since May 1, prices of its products in Singapore, both in stores and online, now range from S$2.14 to S$25.47.

Mr Tomioka reiterated that the decision to raise prices was not an easy one to make. While the firm has seen “ups and downs” in terms of costs across supply chains since it first entered Singapore 20 years ago, recent global developments such as the COVID-19 pandemic have left it with “no choice” but to move away from its flat rate of S$2.

Container freight rates, for one, have shot up by 200 per cent over the past two years.

“It’s not just us,” said Mr Tomioka, adding that all discount retailers are facing a “cut-throat” situation amid rising costs.

Asked about sales performance and footfall at its stores since the price adjustment, the president replied that customers have been understanding and the impact has been minimal.

Pointing to the long queues at its stores prior to the price hike, Mr Tomioka noted that customers have stocked up on their favourite products and are likely “not in a hurry to buy more for now”.

“So far so good,” he said. “We will wait for more customers to come back.”

Still, the retailer recognises that price increases can not be the only way out and already has measures to cope with the challenge of rising costs.

Operations wise, it has rolled out self-checkout counters at the new Jurong Point store in a move to cut down on staff needed to man its cashiers. It plans to have more of such self-checkout counters at other stores across Singapore to save on operation costs, said Mr Tomioka.

Daiso is also “being more conscientious” with the packing process of its shipments so as to maximise the number of items it can pack in each container, while mulling how to be more cost-efficient across other parts of its supply chain by “looking for better opportunities” be it in raw materials or other supplies.

Meanwhile, being a global company gives it a “stronger” buying power and the advantage of economies of scale as compared to other discount retailers, Mr Tomioka said.

“With that, I believe we can continue to create innovative products for our new brands.”